Here’s the bad news: the country is in the middle of its worst financial crisis since the Great Depression, and things are likely to get worse before they start getting better. Here’s the good news: not every business suffered during the Depression, and not every business has to suffer today.
Some companies even thrived during those difficult times. In some cases, that success was a matter of being in the right industry, but other business did well during the Depression because of choices and strategies made by their leadership. Modern businesses can use some of those same choices and strategies to make it through until happy days are here once again.
Helping the Competition In
When money gets tight, competition becomes vicious as businesses vie for what money remains available in the economy. This is one reason a record number of businesses – proportionately speaking – failed during the Depression. It’s bad business, even if it might be good karma, to help a competing company out in such an economy. However, companies like Allied Chemical, General Foods and International Nickel made a practice during the 30s of helping their competitors ¬in. They bought competing businesses as they went under in the tough conditions. This was not a short-term game that made things easier during the slump, since the capital spent to acquire those businesses wasn’t available for other operations. As the economy recovered, though, the increased market share turned many of those businesses into giants.
Finding Money for Advertising
A broad study of the businesses that did best during the Depression found that the big winners – winners like Coca-Cola, Disney and General Foods – continued advertising as if nothing was wrong with the economy. Some of the most interesting commercial art of the century comes from their larger-than-life efforts during this period. Since other businesses were curtailing advertising to cut expenses, every dollar spent on advertising had significantly greater effect than the same efforts would have while the economy was booming.
Cutting Back
Most businesses have an ebb and flow to the day, week, month and year. This can mean operating at a loss some of the time while making up for it during busy periods. During the Depression, companies that identified – and jettisoned – those least productive hours were able to survive the worst of the economic downturn. In 1932, Levi Strauss avoided closing plants and laying off workers by cutting two days out of the work week, allowing the company to keep operating and for their employees to continue earning some level of income. The Shevlin-Hixon saw mill of Bend, Oregon made a similar move by cutting all shifts to half duration until sales began to increase. When the economy began picking up, both companies had the work force, stock on hand and infrastructure to be the first in line.
Diversifying Offerings
While some companies succeeded by buying out competition during the Depression, others thrived by competing with more businesses. General Electric, Westinghouse and American Can grew their operations in order to create more income streams. Any single source of income wouldn’t have generated enough profit to keep the company strong, but the combined value of the multiple streams was more than sufficient.
Making Things Fun
The Depression was the first huge leap for cinema, and saw an explosion in entertainment magazines like the pulps. People needed to escape from the hardships of daily life, and those industries provided that escape. At the local level, bars and clubs did surprisingly well by offering the same escape to weary and frightened customers. Customers were looking for cheaper ways to find entertainment, and often had more time to fill than during a better economy. Any business capable of providing that was in a position to succeed over those that couldn’t.
Offering Value
Although this sounds more like a marketing platitude than a business strategy, a surprising number of companies fail in a tough economy by not observing this basic rule. When wallets get thin, people will favor companies that offer more for less. During the Depression, some of the most successful companies were those that offered inexpensive and necessary items, like utility companies and greengrocers. Others made it by selling products more economically than their competition. This is why Sears & Roebuck did so much better than Macy’s during that period.
Hitching a Ride
Many Depression-era companies prospered by positioned themselves favorably along with other successful trends. Levi Strauss, for example, saw a rise in popularity as the booming interest in Hollywood westerns brought jeans to the notice of mainstream American culture. But then Strauss took the concept of visual to a whole new height by innovating a new means of branding. Long before Tommy Hilfiger or Calvin Klein were born, Strauss added the ‘in your face “ red Levi’s label to the jean’s rear. By playing to this low cost advertising, Struass was able to emerge as the preeminent jeans brand in America.
Article by Jason Brick
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